Down the Memory Hole

Listening the Republican debate last night, I was once again struck by the extent to which these folks are stuck in a tattered old box when it comes to economic policy. Deregulation, supply-side tax cuts, turn the entitlements over to the market, etc... the very agenda that got us into this mess.

That's not a surprise, of course -- it's what anyone who's been paying attention would have predicted. But you have to wonder why anyone whose income is, oh, I don't know... like under $1 million, would hear those ideas and say, "Yeah... that's the ticket!"

But, alas, people tend to have short memories about such things, and there's a lot of noise to muddy the water. So, allow me, in one simple graph, to provide a reminder.

The figure compares average monthly job losses and gains in two periods: the first quarter of 2009, when the president took office, and the last three months (averaging over three months is a good way to smooth out random variation and get at the underlying trend).

Source: BLS

Back in early 2009, we were losing jobs at a rate the likes of which I'd never seen -- 780,000 per month -- 2.3 million jobs lost in the first quarter. Over the past quarter, we've been adding jobs at a rate of 160,000 per month (and that includes last month's disappointing 54K gain).

Readers of this blog know that I don't think that's good enough. I and others are actively agitating to do more to build on this progress. But let us not forget where we were.

Am I saying ideas like those the Republicans were espousing last night are directly responsible for that first bar above? Only kind of. I am saying this: that policy agenda very much helped to create the conditions under which deregulated capital markets could inflate a housing bubble, generating sharp inequalities along the way and defunding and defanging government's ability to do much about it.

There's another graph to look at, however. This one shows two other important indicators -- real GDP growth and unemployment -- of then versus now. GDP growth has been growing for almost two years, though clearly not fast enough to bring down the unemployment rate, which is higher now. The damage done by the Great Recession is still with us and employers are simply not creating enough jobs to bring it down. In other words, we're nowhere near out of the woods.

Sources: BLS, BEA

But it would be the height of economic self-destruction to take that same path back into those same woods.

This post originally appeared at Jared Bernstein's On The Economy blog.